Oil prices moved to a new 26 month high on Monday after major oil producing nations said they have no immediate plans to raise production.
London Brent crude rose 44 Cents to $94.21 and US Sweet Light crude jumped by 27 cents in Asia to $91.78.
The major oil producing countries group, the Organization of Petroleum Exporting Countries (OPEC) does not intend to meet before June 2011 to discuss production issues, said some members of OPEC. Analysts are blaming the recent cold spell in the US for pushing prices further up.
However, the recent interest rate hike in China on the Christmas day had helped temper the country’s immediate energy requirements. Oil prices had fallen by 4% in mid-October when China had last hiked interest rates.
Serene Lim, an oil analyst at ANZ said: “China’s interest rate hike is having some impact on the oil markets… because of concerns over how the tightening of monetary policy will impact demand growth”.
Oil prices have risen by about 15% since mid-October since energy demands have shot up due to an unusually harsh cold winter in Europe.
Higher fuel prices will stoke inflation and hamper the world economic recovery, some analysts fear. JBC Energy said in its report that “High oil prices were one of the contributors to the last global crisis”. Arguing that the effect of higher energy cost will not be immediate on the economy, the report said: “The largest effect of an oil price shock on the economy occurs around three to four quarters after the price spike”.